Merkel, retailers haggle
over tax boost

Plan to ease deficit produces
concerns on spending, profits

By

George Frey Dow Jones Newswires

Updated Jan. 6, 2006 12:01 a.m. ET

FRANKFURT -- Germany's retailers are worried that a proposed increase in the country's value-added tax would dash hopes for an economic recovery by further suppressing weak consumer spending while denting their own profits.

But the government of the new chancellor, Angela Merkel, says the increase is crucial to get German finances in order and put the economy on a firm footing for the long term.